Relative to a perfectly competitive market, a monopolistically competitive market produces a_____ level of output and charges a _____ price.

Question

Quizplus · Accepted Answer

In a monopolistically competitive market, firms have some market power, allowing them to charge higher prices compared to perfect competition. However, this market power also typically results in less output being produced compared to a perfectly competitive market, where firms are price takers and produce at the point where price equals marginal cost.

Relative to a Perfectly Competitive Market, a Monopolistically Competitive Market